arnold plant 'the economic aspects of copyright in books' 2548748

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The Economic Aspects of Copyright in BooksAuthor(s): Arnold PlantReviewed work(s):Source: Economica, New Series, Vol. 1, No. 2 (May, 1934), pp. 167-195Published by: Wiley-Blackwell on behalf of The London School of Economics and Political Science and

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1934]

The Economic Aspects of Copyrightin Books'By ARNOLD PLANT

(Sir Ernest Cassel Professor of Commerce n the University ofLondon)I. IF an economist needed encouragement or justificationfor devoting time to the consideration of the effects of copy-right legislation on the output of literature, he might find itin the stimulating introduction which Professor Frank H.Knight has contributed to the reissue of his Risk, Uncertaintyand Profit. " Having started out by insisting on the necessity,for economics, of some kind of relevance to social policy-unless economists are to make their living by providing pureentertainment or teaching individuals to take advantage ofeach other," he discusses the conditions of relevance of eco-nomics to social policy, and his " first and main suggestion"is that an " inquiry into motives might well, like charity, beginat home, with a glance at the reasons why economists writebooks and articles."2 Direct monetary profit from the sale

of what they write does not figure in Professor Knight'ssuggestive discussion of the motivation of economist-authors;although for three, if not four, centuries the advocates ofproperty in the right to copy have argued as though bookproduction were the conditioned response of authors, pub-lishers and printers to the impulse of copyright legislation.An inquiry into the rationale of copyright seems thereforeboth worth while in itself and likely to prove of generalinterest among students of economics.There is, of course, a special difficulty in discussing thesubject of copyright, in that a writer has an unavoidable bias.How many of us approach the topic in the spirit evinced byH. C. Carey in his Letters on International Copyright? " Thewriter of these Letters had no personal interest in the question

'Presidential Address to the London Economic Club, March I3th, I934.2 London School of Economics Seriesof Reprints, No. i6, pp. xxv-xxvi.

I67


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i68 ECONOMICA [MAYtherein discussed. Himself an author, he has since gladlywitnessed the translation and republication of his works invarious countries of Europe, his sole reason for writing themhaving been found in a desire for strengthening the manyagainst the few by whom the former have so long, to a greateror less extent, been enslaved. To that end it is that he nowwrites, fully believing that the right is on the side of theconsumer of books, and not with their producers, whetherauthors or publishers."l T. H. Farrer, at that time PermanentSecretary to the Board of Trade, found it necessary to observe,when reviewing the proceedings of the Royal Commission onCopyright in the FortnightlyReview (December 1878), thatauthors. who were the principal witnesses, are interestedwitnesses: " printed controversy is therefore, on the whole,one-sided." It is rather like relying on articles in the dailynewspapers for views on the waste involved in Press adver-tising. Bias, and fear of bias, make an author's judgment oncopyright a little unreliable. His readers must exerciseparticular vigilance.2. Bookproductionwithout copyright

A convenient approach to the whole subject is to try tovisualise the organisation of production of books, which weselect as a typical commodity for the purpose of this inquiry,in the absence of any sort of copyrtght provisions. We maydefine " the absence of copyright provisions " as the circum-stances in which the buyer of a literary product is free, if he sodesires, to multiply copies of it for sale, just as he may in thecase of ordinary commodities. Would books be written insuch circumstances, and would they be published ? Wouldfirstly authors, and secondly publishers, find it possible tomake arrangements of a sufficiently remunerative kind toinduce them to continue in the business of book production ?3. The unpaidauthor

It should be observed at the outset that part of the outputof literature is written without thought of direct remunerationat all. There are authors-scholars as well as poets-who areprepared to pay good money to have their books published.I H. C. Carey: Letters on International Copyright (Preface to znd Edition. NewYork, i868) and The International Copyright Question Considered (Philadelphia,

[172). Carey was at one time a publisher himself.


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I934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I69It is conceivable that their output is in some cases quiteunaffected by demand conditions: so long as they can go onpaying they will go on writing and distributing their books.There is secondly an important group of authors who desiresimply free publication; they may welcome, but they certainlydo not live in expectation of, direct monetary reward. Some ofthe most valuable literature that we possess has seen the lightin this way. The writings of scientific and other academicauthors have always bulked large in this class. Economistsare relatively fortunate in serving a market which so frequentlyprovides a margin above costs of publication for the remunera-tion of the author; their colleagues in other faculties are usuallyonly too pleased to secure publicity for their contributionsto our literary heritage without financial subsidy from them-selves. Publications are, of course, in varying degree essentialfor their careers, in professions other than that of authorship.They seek recognition of their claims as scholars; and pub-lished work they must have, even at the cost of paying for it.Speak to them on the subject of direct immediate return, andthey reply in terms of numbers of off-prints or " separates."In just that way were authors quite generally paid in thiscountry in the sixteenth century: they sold their manuscriptoutright to the publisher for perhaps at most one or twohundred copies: on occasion a little money might also pass.For such writers copyright has few charms. Like publicspeakers who hope for a good Press, they welcome the spread oftheir ideas. Erasmus went to Basle in I 522, not apparently toexpostulate with Frobenius for daring to print his manuscriptwritings, but to assist the printer in the good work. Thewider the circulation, the more universal the recognition theauthor would receive.4. Thepaymentof authorswithoutcopyright

What, however, of a third group of authors-the pro-.fessional scribes, who write for their living ? Whether theysell their writings to publishers, who buy them because theyhope to sell copies, or whether they publish them direct, theirliving depends on the direct proceeds from their writing, and.in both cases their receipts depend on the number of copies.sold. Clearly, they- both author and publisher-would gaindirectly from the restraint of all reprinting that resulted in a.diminished sale of their own copies. If the purchase of a copyceased to carry with it the right to make further copies from it


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I 70 ECONO MICA [MAYfor sale, the author and original publisher might contrive to domuch better for themselves, by the simple monopoly device ofrestricting the number of copies offered on the market. Theywould do still better if they were given the power to controlalso the supply of directly competing books, as early pub-lishers had in this country. It goes without saying, of course,that that undoubted fact is not an adequate reason why thegeneral public should give them either degree of monopolypower.The belief has been widely held that professional authorshipdepends for its continued existence upon this copyrightmonopoly; or upon an alternative which is considered worse,viz. patronage. Even if that were true, it would still benecessary to show beyond reasonable doubt that professionalauthors were worth retaining at such a price as copyright.The output which monopoly alone can evoke is not normallyregarded as preferable to the alternative products which freecompetition would allow to emerge. Patronage itself may notbe wholly an evil. There seems to be no reason why a personwho wants certain things written and published should not beat liberty to offer payment to suitable people to do the neces-sary work. If the task is uncongenial, some authors will needhigh remuneration, and others will no doubt decline anyterms; but many a builder has been willing in the past toerect even monstrous dwellings for rich men who had theirown ideas about architecture. Patronage has in the past pro-vided us with some magnificent literature, music, pictures,buildings, and furniture. There have been patrons who havegiven artists a very free hand in their work. Civil servants,secretaries of commissions, lawyers and others have conceivedit their normal duty to express in imperishable language theviews of their employers, with whom they may personallyhave been in disagreement. To Macaulay, nevertheless,speaking in the House of Commons at the second reading ofSerjeant Talfourd's Copyright Bill in I84I (February 5th,Hansard, Vol. LVI), patronage was the only alternative tocopyright; and it was so objectionable that it justified copy-right. " I can conceive no system more fatal to the integrityand independence of literary men, than one under which theyshould be taught to look for their daily bread to the favour ofministers and nobles.'i . . . " It is desirable that we shouldhave a supply of good books; we cannot have such a supplyunless men of letters are liberally remunerated, and the least


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I1934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I7Iobjectionable way of remunerating them is by means ofcopyright." . . . " The systemof copyrighthas greatadvan-tages, and great disadvantages." . . " Copyright is mono-poly, and producesall the effects which the general voice ofmankind attributes to monopoly." . . . " Monopoly is anevil." . . . " For the sakeof the good we must submitto theevil; but the evil ought not to last a day longerthan is neces-sary for the purpose of securing the good." . . . " Theprinciple of copyright is this. It is a tax on readers for thepurpose of giving a bounty to writers. The tax is an exceed-ingly bad one; it is a tax on one of the most innocentandmostsalutaryof human pleasures; and never let us forget that atax on innocentpleasures s a premiumon vicious pleasures."But Macaulayneverthelesspreferredcopyrightto patronage.Is there no other alternative, n the absenceof copyright?For the momentit will be sufficient o remark hatprofessionalwriters have contrivedin the past to secure a price for theirproduct, in such circumstances,providedalwaysthata marketexists for it at all. And it mustbe bornein mind that copyrightin a particularwork cannot itself createa demandfor the kindof satisfactionwhich that work and similarworksmay give, itcan only makeit possibleto monopoliseuch demandas alreadyexists. Ultimately there must be patronsamong the public,whom the authormust serve if he is to sell his product. In theearly days, authors were sometimes curiously employed.Italian paper-makers in the fifteenth century integratedforward,andorganisedstaffsof writersto work on theirpaper,in the hope of thereby making the marketfor their productmore secure.1We areremindedof the present-dayntegrationsof papermanufacturers nd newspapers mploying ournalists.In the daysof manuscripts herewas never,so far as we know,any thought of author's copyright. Manuscripts were soldoutright,the authorknowingthat the buyermight havecopiesmadeforsale; andthe firstbuyerknew thatevery copyhe soldwas a potential source of additional competing copies. Inselling copies, he would thereforeexploitwith all his skill theadvantage he possessed in the initial time-lag in makingcompeting copies. Moreover, copies of copies naturallyfetched lower prices,for errors n transcription recumulative;and the owners of original manuscriptscould sell first-handcopies at special prices. They therefore received a morepermanentmarginfrom which authorscould be paid. It was

1 See Putnam: Booksand Their Makers.


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I72 ECONOMICA [MAY

all very like the present-day rade in new fashioncreations-the leading twenty firms in the haute coutureof Paris takeelaborateprecautions wice each year to preventpiracy; butmost respectable" houses" throughout he world arequickinthe marketwith their copies (not all madefrom a purchasedoriginal), and " Berwick Street" follows hot on their heelswith copies a stage farther removed. And yet the Pariscreatorscan and do secure special prices for their authenticreproductions of the original-for their " signed artist'scopies," as it were. Augustin-CharlesRenouard,the writeracenturyago of two importantbookson patentsand copyright,quotes in his treatiseDes Droits d'AduteursI 838) an estimatethat there were io ooo manuscript copyists in Paris andOrleansalone at the time of the inventionof print'ing. Book-sellers werethen middlemenbetweenthe buyersof copies andthe copyists: it was in part a " bespoke" trade. Copyingwasnot by any means confined to the existing stock of classicalworks by dead authors,for despite the copyists the age hasleft a legacy of literatureof its own. Unprotected by copy-right, publisherswere able to pay their authorsthen, just asdresscreatorscanpaytheirdesignersto-day.Was this all alteredby the inventionof printing? In fact,the making of copies was regulated almost at once; but weknowbeyondany doubtthat the reasonwas not to ensurethatauthors were better remunerated. The early historyof bookproduction n this countryis most illuminatingon this wholequestion, and it will be touched upon in a moment. For thepresent,it will sufficeto observethat four centuriesafter thedaysof Caxton,many English authorswereregularlyreceivingpaymentfrompublishers n a countrywhichhad no copyrightlaw for foreign books. During the nineteenthcentury anyonewas free in the United States to reprinta foreign publication,and yet American publishers found it profitable to makearrangementswith English authors. Evidence before theI876-8 Commission shows that English authors sometimesreceived more from the sale of their books by Americanpublishers, where they had no copyright, than from theirroyaltiesin this country. From the economic standpointitis highly significant that, although there was no legislativerestrainton the copying of books published abroad, com-petition remained sufficiently removed from that abstractcondition of " perfection," in which there could exist nomargin between receipts and costs for the remunerationof


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I934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I73authors, for " handsome sums " in fact to be paid. In the firstplace, there was the advantage, well worth paying for, which apublisher secured by being first in the field with a new book.To secure priority American publishers regularly paid lumpsums to English authors for " advance sheets."'L Secondly,there was a " tacit understanding among the larger publishersin America that the books published by one should not bepirated by another."2 Each notified the other of arrangementshe had made.3 What of other publishers who might betempted ? It was explained, thirdly, to the Royal Commissionof I 876-8 " that the practice of all the great houses in America(there are some three or four large publishing houses withvery great capital), if anybody publishes one of their books, isto publish a largely cheaper edition at any cost, and they wouldmake any pecuniary sacrifice rather than not cut out a rival."4" Fighting editions " in the book-publishing trade served thesame purpose as " fighting brands " in the cigarette business," fighting ships" on the shipping conference routes, and" fighting buses " in post-war London passenger transport.Yet, fourthly, perhaps the most important check on the rivalpublisher, whose competing edition would in any case be latein the field, was the low-price policy which the Americanpublishers adopted. American editions might cost one-half asmuch as the English issue; one quarter or even one-eighth ofthe English price was very frequent. In such circumstances,the American public enjoyed cheap books, the Americanpublishers found their business profitable, and the Englishauthors received lump sums for their advance sheets androyalties on American sales.5

1 E.g. Evidence of G. H. Putnam.2 Evidence, Professor John Tyndall, Question 5795.3 E.g. Evidence of G. H. Putnam.4 Evidence, Professor T. H. Huxley, Question 56IO.5 E.g. Evidence of T. H. Huxley, Question 56IO. " I myself am paid upon bookswhich are published there: my American publisher remits me a certain percentageupon the selling price of the books there, and that without any copyright which canprotect him." Also John Tyndall, Question 5775: ".... I make an arrangement withmy publishers . . . in New York, and they every year send me an account of theirsales and allow me a certain percentage on the retail price of my books." Asked(Question 579I) if the percentage were as large as it would have been if he had hadcopyright in America, his answer was: " I cannot say, but I should be inclined tothink so, because I am in the hands of a most high-minded publisher. I believe thatI should gain no advantage by the copyright in America that I do not possess atpresent. But though I should be unaffected, on public grounds I hold that a copyrightought to exist."Cf. also Herbert Spencer in a letter to The Times, September zist, I895, reprinted

in Various Fragments (I900): " For a period of thirty years, during which English


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The significanceof priorityin the market,coupled with asuitable size of editionand a correspondingprice policy, as adeterrentto competitionis emphasisedby an illustration. Inan appendixto his book on TheMarketing f LiteraryProperty,published in 1933, Mr. G. H. Thring gives a number ofaccounts of the costs of book production. Taking his figuresfor a crown octavo volume of 288 pages, eleven point, twenty-nine lines per page, an edition of i,5oo copies would involveapproximately /300 to cover all publishing costs, pay Io percent. to the author and leave a profit of I63 per cent. to thepublisher on all the costs, including royalty. That would meanan average wholesale price of 4s. per copy, and a retail price ofsay, 6s. If the book were a success, and there were no copy-right law, a rival publisher might very probably come into themarket with a larger and therefore cheaper edition whichwould deprive the author and first publisher of at least part oftheir anticipated receipts. They might, of course, lower theprice as soon as success showed itself to them, and reprint atonce on a larger scale, before competitors could formulateplans. A publisher who was more skilful in judging publictaste might, however, have embarked in the first instance onan edition of, say, 3,000 copies, and if he calculated on receivingthe same total amount of profit himself from the venture andon paying twice the previous total royalty to the author, thetotal sum involved might be about /382, or 2s. 9d. per copywholesale, corresponding to (say) 4s. retail.1 A price as low asthat would surely make competitors hesitate before issuing,works had no copyright in America, arrangementsinitiated about 860 gave to Englishauthors who published with Messrs. - profits comparable to, if not identical with,those of American authors."

1 The relevant detail of the costs, based on figures of Mr. Thring, is:Edition of i,5oo copies. Edition of3,ooo copies. sd. s. d.

Composition ... ... 46 2 6 46 2 6Machining ...... 5 io 6 22 9 0Paper .. ... ... 18 18 o 37 i6 oBinding ...... 36 o o 54 o 0Brassesfor cases ... I 2 0 I 12 0Jacket ...... 2 II 13 3 oAuthor's Corrections ... 6 o o 6 o oAdvertising .... 60o oo 60o ooPostage, etc. ... 1. 0 0 1o 0 0Royalties ... 40 o o 80 o oProfit... ...... 50 50 0 0

296 I4 o 381 I2 6

[MAY74 ECONOMICA


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I934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I75late in the day, the still much larger rival edition which wouldbe necessary to make possible an appreciable further cut inprice. If a competing edition were issued much more cheaplyon poorer-quality paper and possibly unbound, it would moreprobably tap a new market than divert the old. The abolitionof copyright need not therefore result in the complete abandon-ment of the business of book production either by publishersor by professional authors.

5. The earlydaysof copyrightOur speculations will be made more fruitful if we pauseto inquire for a few moments into the nature and effects ofcopyright regulations in this country.The earliest records are hardly less enlightening than thoseof our own generation. Regulation began in Tudor timeswith the usual system of royal patents, conferring upon certainpersons the monopoly of the right to print particularbooks orclasses of books. The patent system was of course applied by

a series of impecunious monarchs to all sorts of enterprise, butprinting was a special case, in due time expressly exempted(together with the manufacture of armaments) from theStatute of Monopolies (2I James I, c. 3) of I623. Theprinters did not fail to turn to their own advantage the deter-mination of the Crown to control the output of the printingpress. Many of the early patent grants were, in their prime,profitable monopolies; one, for example, comprehending allgrammars in the Latin tongue, another the Bible, a thirdcovering all dictionaries, a fourth all books on law, and so on.A specialist writer, confronted by a buyer's monopoly for hisclass of work, had little hope of early publication, still less of aprofitable sale of his manuscript, if the monopolist had on hishands a large stock of a competing book already printed.After I557, when the general control of the industry wasentrusted to the Stationers' Company,' a comprehensiveattempt was made at rationalisation in the interest of itsmembers. Each printer's rights to print were registered by theCompany, and rights were assignable by one member toanother. Whenever exceptional profits attracted interlopers,the case against unregulated competition was argued by the

' On the Stationers' Company see A Transcript of the registers of the CompanyofStationersof London, I554-I640 A.D., edited by Edward Arber, I875. I am indebtedfor many of the references concerning this period to the researchesof Miss M. Plant.I have modernised the spelling in quotations.


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176 ECONOMICA [MAYCompany with a skill which our present-day trade associationshardly excel. Already in I583 the report of ChristopherBarker went to show that the patent monopolies were not whatthey had been. For instance, the " most profitable copy " inthe country, a Latin grammar for children, carried fixedcharges which left the printers little more than prime costs;" the printer with some greater charge at the first for furnitureof letters, hath the most part of it always ready set: otherwiseit would not yield the annuity which is paid therefor." Mono-polies cut into each other: Barker himself had the patent forthe Book of Common Prayer, but Master Seres had one for apsalter comprising the most-used parts-" where I sell onebook of common prayer, which few or none do buy except theminister, he furnisheth ye whole parishes throughout therealm, which are commonly a hundred for one." MasterSeres skimmed the cream. The industry alreadysuffered fromserious surplus capacity: " there are 22 printing houses inLondon, where 8 or IO at the most would suffice for allEngland, yea and Scotland too." There were too manyprinters with narrowly specialised skill: " who do both knowand confess that if privileges were dissolved they were utterlyundone, having no other quality to get their living." Andthere were the interlopers, challenging the patent monopoliesand making public collections for legal expenses: " of whichcompany being five in number, one John Wolfe, now prisonerin the Clink, is the chief."

The era of the Star Chamber's decrees and censorship was ahappy time for the members of the Stationers' Company.Compared therewith, confusion reigned as soon as the backingof the Star Chamber was removed by the Long Parliament inI64I, and the Company's petition of I643 to Parliament forgreater powers of regulation' was cunningly designed to makethe flesh of an uncertain authority creep. " Too great multi-tudes of presses " set up by " Drapers, Carmen and others,"were alleged to be in work, indiscriminately printing " odiousopprobrious pamphlets of incendiaries." The ear of govern-ment thus attuned, the petition proceeds to business. Evenmembers of the Company were ignoring property in copies,and if one complain he " shall be sure to have his copyreprinted out of spite." The copyright monopoly is " anecessary right to stationers; without which they cannot at allsubsist." . . . " Property in copies is a thing many ways

I See EdwardArber,op. cit., Vol. I.


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1934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I77beneficial to the State, and different in nature from the engross-ing, or monopolising some other commodities into the hands[of] a few, to the producing of scarcity and dearth, amongst thegenerality." The stationers then pass to a statement of thecase for copyright which would not discredit an " economicadviser" to a modern publishers' association. The firstconsideration is that books are luxuries, the demand for whichis elastic, and therefore monopoly cannot harm the public.

Books (exceptthe sacredBible) are not of such general use andnecessity, s somestaplecommoditiesre, whichfeedandclotheus, norarethey so perishable,r require hange n keeping, omeof thembeingonce bought, remain to children'schildren,and many of them arerarities nly andusefulonly to a veryfew, andof no necessity o any,few menbestowmorein Booksthan what they can spareout of theirsuperfluities. . And thereforepropertyn Booksmaintained mongstationersannothavethe sameeffect,in order o the public,as it hasin other Commoditiesf morepublicuseandnecessity.

The second consideration is that copyright monopoly wouldresult in more and cheaper books.A well-regulatedropertyf copiesamongsttationers,makesprintingflourish,and booksmore plentifuland cheap; whereas Community(thoughit seemsnot so, at first, to such as look less seriously,andintentivelyuponit) brings n confusion,andmanyotherdisordersothto the damage f theStateandthe Company f Stationerslso; andthiswillmanywaysbeevidenced.

Their reasons recall the oscillation theory of modernspecialists in the mysteries of perfect competition. Over-production would result from an absence of copyright:For first, f it belawfulfor all mento printallcopies,at thesame imeseveralmen will eitherenviously rignorantly rint hesamething,andso perhapsundoone another,andbringin a greatwaste of the com-modities

and under-production also:Secondly,the fear of this confusionwill hinder many men fromprintingat all, to the greatobstruction f learning,andsuppressionfmanyexcellentandworthypieces.

Booksellers' risks and costs would increase:Thirdly,Confusion r Community f CopiesdestroyshatCommerceamongststationers,whereby by way of Barter and Exchangetheyfurnishbookswithoutmoneyone to another,and are enabled hereby

to printwithlesshazard, ndto sellto othermenfor lessprofit.


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I78 ECONOMICA [MAYEven professional uthorscomein forconsideration:

Fourthly, Community as it discouragesstationers, so it is a greatdiscouragement o the authorsof books also ; many men's studies carryno other profit or recompense with them, but the benefit of theircopies; and if thisbe taken away,many pieces of great worth and excel-lence will be strangled in the womb, or never conceived at all for thefuture.Copyrightshouldpass to heirs and assignswithout term:

Fifthly .. . many families have now their livelihoods by assignmentof copies . . . and there is no reason apparentwhy the productionofthe brain should not be as assignable . . . as the right of any goods orchattelswhatsoever.And finally, n view of the foregoing:

'Tis obvious to all, that (if we will establisha just regulation)foreignbooks must be subjected to examination,as well as our own, and thatall such importationof foreign books ought to be restrained as tendsto the disadvantageof our native stationers.The case for copyrighthasrarelybeen statedas comprehen-sivelyas in this earlypetition. Parliamentrespondedpromptlywith the requisiteOrdinanceof I 643 (virtuallya re-enactmentof an old Star Chamberdecree),to which we owe at least theinspirationof John Milton's Areopagiticaf the followingyear.Under the Commonwealth, oliticalcensorshipwascontinued,and afterthe Restoration he officeof Licenserwas revivedbyan Act of i662 (I3 and I 4 Car. II, C. 33) which was little morethan a new version of the former ordinances. The Act expiredin I 6 79, was renewed in i 6 85, continued again till I 6 92, andthen re-enacted for two more years. It lapsed finally in I 694.Until then, the control of the Stationers' Company continuedover all copyright, which had to be registered in its books;but thereafter its- authority to restrain reprinting ceased.

6. Competition, nd thefirst CopyrightStatuteAs we have seen, authors could expect little benefit tothemselves from the patent system. The printer who enjoyedthe patent right for a particular class of book had a buyingmonopoly for all manuscript books in that class, and authorswere in his hands. Under the control of the Stationers'Company, as members began to compete among themselvesfor the right to issue new books, authors were gradually

enabled to bargain with more success. In the seventeenth


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I 934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I79centurysome of them were in a position to sell the rights topublish only one edition of a stated number of copies; andcash payments, in addition to the delivery of the authors'copies, became more general. The bulk of the publishingbusiness came into the handsof the London booksellers,whowere, of course,membersof the Stationers'Company. Theircontact with the market made them good judges of bookswhich would sell, and they could thereforeofferbetterterms.On occasion heysharedthe risks in expensivepublicationsbytakingover stock from each other by exchangeor purchase.It was at the end of the seventeenthcenturythat competitionfrom publishersand printersoutside the Stationers'Companybecame really severe. The era of political and religiouscensorshipwas passing, and the Company could no longerinterest the Governmentin the control of the new printingpressesspringingup throughoutthe country. The doctrineofperpetualcopyrightwhich the Companyhad endeavoured oestablish, on the evidence of assignments registered in itsbooks, began to be floutedon all sides by the countrybook-sellers, particularlyafter the Licensing Act lapsed in I694.The Londonbooksellersmadea seriesof unsuccessfulattemptsto securenewlegislation,andit was not until the eighth yearofQueen Anne that they securedthe passageof the first Copy-right Statute.7. The"perpetual opyright question

In view of the claimswhich the Stationers'Companyhadhithertomade,the termsof the CopyrightAct of I 709-IO aresignificant. In the case of existing books, the Act gave theauthors, or if they had transferredtheir rights (which, ofcourse, they almost invariablyhad) the then proprietors,thesole rightof printingthemfor twenty-oneyearsandno longer.In the caseof newbooks,the authorwasgiven the sole rightofprintingthem for fourteenyearsfrom the dateof publication,and, if then still living, for one further term of fourteen years.The penalty for pirating was forfeiture and a fine of one pennyper sheet, the protection extending only to books registered atthe Stationers' Company. It will be noticed how closely theAct followed the patent system for inventions, as preserved inthe Statute of Monopolies of I623. The London booksellers,who must by then have despaired of ever securing the per-petual copyright which at one time they had claimed, had noreason to oppose the grant, enforceable in the Courts, of


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ECONOMICAfourteen years of monopoly power for every new book theybought outright, although some of them subsequently pro-tested when they realised that the second period of fourteenyears granted to authors who were still living was the author'sproperty to sell again.lAuthors themselves were placed in a much better bargainingposition. Their success depended upon individual popularityand reputation. As regards " bargaining power," they neededonly to avoid committing themselves far ahead in any onecontract, for if their books sold well they could rely on book-sellers to bid up each other. The career of David Hume as anauthor well illustrates the position.2 In 1739 at the age oftwenty-eight he sold the rights to the first edition in twovolumes of his first book, A Treatiseof Human Nature, I,ooocopies to be printed, to John Noon, bookseller, for fiftyguineas and twelve bound copies. A year later, the thirdvolume, A DiscourseConcerningMorals,was ready, and althoughNoon was very willing to take it Hume found it more profit-able to contract with Thomas Longman, to whom FrancisHutcheson had referred him.3 In subsequent years he issuedseveral editions of his Essays through Kincaid, Donaldson, andultimately the very astute London publisher, Andrew Millar.In 1754 we find him engaging with Edinburgh booksellers topublish 2,000 copies of the first volume of his Historyof GreatBritain for /400; but Andrew Millar paid him 700 for therights to one edition of the second volume, and the same forthe subsequent section (in two volumes) on the Tudors. InI759, twenty years after selling his first book, Hume con-tracted with Millar to write the early section of the History,

1 For an entertaining and informative account of this period see Augustine Birrell:Seven Lectures on the Law and Historyof Copyrightn Books. (Cassell, 899.)2 See The Letters of David Hume, edited by J. Y. T. Greig.3 Letter, March 4th, 1740, to Francis Hutcheson: The same bookseller " is verywillingto engageforthis,and he tells methatthe saleof the firstvolumes, houghnotveryquick,yet it improves.I haveno acquaintancemongthese olks,andverylittleskill in makingbargains. . . Therearetwo favours, herefore, must ask of you, viz.to tell me whatcopy moneyI may reasonably xpectfor oneeditionof a thousandofthisvolume,which will makea fourshillingsbook: and,if you knowanyhonestmanin thistrade, o sendme a letterof recommendationo him thatI mayhavethe choiceof more han oneman to bargainwith."And again,letter,March i6th, I740, to the same: " I must troubleyou to writethatletteryou wasso kind as to offerto Longman, he bookseller.I concluded ome-whatof a hastybargainwithmy booksellerrom indolenceand an aversiono bargain-ing, as also because wastold thatfew or no booksellerwouldengagefor one editionwithanewauthor.... I... alsoengagedmyselfheedlesslyn aclause,whichmay provetroublesome,iz.thatuponprintingasecondeditionI shall akeall thecopies emaininguponhandat the bookseller's riceat the time."

I80 [MAY


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I934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I 8I" from the beginning to the accession of Henry VII," forA,400, " the first previous agreement ever I made with abookseller." Millar apparently also bought the " full pro-perty " in the first two volumes of the Historyfor another eighthundred guineas. Nevertheless, David Hume had reason toprotest frequently against the sharp practices of AndrewMillar, who deceived him continually concerning the size ofeditions and their rate of sale, and reprinted an editionwithout giving the author the agreed opportunity to correct thetext.Andrew Millar took a leading part in the renewed attemptwhich the London booksellers made in the middle of theeighteenth century, despite the Copyright Act of I709, toestablish their claim to perpetual copyright.' The traffic in" copyrights " of existing books was continued, as though thatAct had not been passed; the London booksellers probablydepending on each other to respect assignments recorded in theregisters of the Stationers' Company. Millar had in I729bought The Seasonsfrom James Thomson, and duly registeredhis property in it. In I 763, fifteen years after Thomson'sdeath, another bookseller, Robert Taylor, republished TheSeasons,and Millar brought an action three years later in theCourt of King's Bench. By a curious majority decision, theCourt found in I 769, after Millar's death, that the I709 Actdid not take away the author's perpetual copyright which, theCourt declared, had existed at common law, and which in thiscase the author had assigned to Andrew Millar. On the basisof that decision, perpetual copyright was for five years there-after the law of England. The country booksellers were notprepared to let the matter rest there; Donaldson, the Edin-burgh bookseller, republished The Seasons once again.Becket, who had purchased the Thomson copyrights at thesale of Millar's effects, secured an injunction against him inthe Court of Chancery, and Donaldson in I 774 appealed to theHo-useof Lords. The House invited eleven judges to answer anumber of questions on the effect of the Act of Queen Anne,and by six to five they declared that it took away the perpetualrights of authors. The House of Lords, with the lay peerstaking an active part (Lord Camden wiped the floor with theLondon booksellers), voted twenty-two for Donaldson and

1 The three famous casesof Tonson v. Collins, I760; Millar 'v. Taylor, 1766; andDonaldson 'v. Becket, I774. For a conven-ientaccount, see Birrell, op.cit.B


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I 82 ECONOMICA [MAY

eleven for Becket.' " Thus for ever,"says Birrell," perishedperpetualcopyright in this realm."The London booksellers,as David Hume advised them to do, made earnestattemptsto secure another law, but their prosperitywas against them,and opinion was too strong. They did better when theyemphasised in those days the interests of authors, just as acentury and a half before they found it most profitabletoprofessanxietyfor the safetyof the realm. Statutesof i 8oi andI 8I4 extendedthe periodof copyrightto the life of the authoror for twenty-eight years, whichever period was the longer.Puttingon one side the ethics of the question, t seemsunlikelythat the extension of the term enabled authors to sell theircopyrights outright to publishersfor much greater prices, orhad any considerable ffect on the output of new literature.8. The Copyright ct of I 842

This rapid surveyof the early history of copyright in thiscountry will have served its purpose if it makes more clearthe interestsconcerned in the important changes introducedinto the law by the Act of I 842 (5 and 6 Vic., c. 45), whichremained in force right through the remainderof the nine-teenth century and was only superseded by the presentCopyrightAct of i 9 iI. The CopyrightAct of 1842 had theeffect in general of adding another fourteen years to themonopoly period. Copyrightwas made to extend for the lifeof the authorplus sevenyears,or forty-twoyears from the dateof publication,whicheverperiod was the greater. There maybe doubt whether the volume of authorship was therebyincreased,but it certainlyincreased the profits to be madefromthe sale of successfulbooks. The immediateoccasion forthe passing of this importantmeasureis of interest; if theevidence of a publisherof the time is to be accepted,2 he Billfound favour in the House of Commons " because it wasunderstoodto be for the special benefit of the family of SirWalter Scott, whose copyrightwas about to expireunder theold law." More specific and less far-reachingmeans ofachievingthat particular nd might well have been devised.

1 It is of interest to note that David Hume at once wrote to Wm. Strahan, the suc-cessor to Millar's business,suggesting the transference afreshto him of Hume's propertyin his most recent alterations to his works. " If nobody can reprint these passagesduring fourteen years after the first publication, it would effectually secure you so longfrom any pirated edition." (Letter, March Ist, I 774, in ThzeLetters of Dacvid Hurme.)2 Cf. Evidence of John Henry Parker, a retired publisher, before the Royal Com-

mission on Copyright of 1876-8.


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1934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I83For seventy years the Copyright Act of I842 exercised afar-reaching influence on the output and prices of English

books in the United Kingdom. Even before it was passed,critics of the copyright system were calling attention to thehigh prices which resulted. In I837, for instance, the Keeperof Printed Books at the British Museum, Thomas Watts byname, advocated in the Mechanics'Magazine the adoption ofthe " compulsory licence " or " royalty" system, by which,since any person who paid to the author a fixed percentage ofthe selling price would be free to print any book, com-petition between publishers could be allowed while securingremuneration for authors.' During the nineteenth century,the differences between the prices of books in England andthe United States were enormous. T. H. Farrer (afterwardsLord Farrer), Secretary to the Board of Trade, presented longschedules of comparative prices as evidence to the CopyrightCommission of 1876-8.9. The defenceof highpricesThe defence of high prices in England which the pub-lishers then advanced was the same as was employed inI643. " Four books out of five which are published do notpay their expenses. . . . The most experienced person cando no more than guess whether a book by an unknown authorwill succeed or fail."2 It was argued that copyright is essentialin order that the monopoly profits from successful booksmight cover the losses. The question is worth a little con-sideration. Without copyright, publishers no doubt would notissue all of the books which copyright elicits, for competitionwould reduce the receipts from those which succeed. Thehigher the profits from the copyright monopoly, the greaterthe willingness to publish the doubtful successes. The odds inthe gamble are made more attractive. Given copyright, there-fore, a larger proportion of available manuscripts will beaccepted by one publisher or another, and more people willcontinue to write who in competition would abandon hope ofseeing their manuscripts in print and would turn to otheroccupations. Monopoly is, of course, a common enough

1 Cf. Evidence of R. A. Macfie, before the same Commission, and see also A.-C.Renouard: Traiti des Droits d'Auteurs, Paris, 1838.2 Edinburgh Revie-w, October I878 ; article on the Report and Evidence of theRoyal Commission on Copyright. Cf. also The Humble Remonstranceof the Companyof Stationers, London, to the High Court of Parliament, April I643: " Scarce one

book in three sells well, or proves gainfull to the publisher."


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184 ECONOMICA [MAYdevice for securing in this way the diversion of scarce resourcesto particular uses. It is involved in the patent system forinventions, in the chartered-company method of opening up" new " territories, in the " public utility corporation " for theprovision of services, and so on. What is generally overlookedby the more enthusiastic advocates of these schemes is thealternative output which the resources would have yielded inother employment. T. H. Farrer, giving evidence before the1876-8 Commission, no doubt had these considerations moreor less clearly in his mind when discussing the weaknesses ofcopyright. " What we want, I believe, is more good booksand cheaper good books; but we do not want more books; wehave too many books at present. Some persons, whoseopinions are deserving of much consideration, wish to do awaywith copyright in order to diminish the number of books, andto reduce the number of those who make authorship a trade.They think that to do so would be a gain to the public inproviding better books, and that it would not discourage thosewho write for the sake of reputation or for the sake of truth,and less for the sake of money. I do not say that I agree withthese persons, but I think they are right in thinking that wehave, under the present system, too many books."'The fact is, of course, that the eminent publishers who havecalled attention to the inevitable element of risk in the conductof their affairs have been prone to exaggerate the unreliabilityof their judgment in selecting manuscripts for publication attheir own risk. Suppose it to be true that four books out of fivefail to pay: are they all-were they ever all-issued at the riskof the publisher ? Faced with really risky propositions, dothey not suggest to the luckless author that he should sharethe risk with them, or bear the whole costs, or secure a subsidyfrom elsewhere ? Would it indeed be sound business for apublisher to subsidise definitely hazardous enterprises out ofthe monopoly profits gained through copyright ? Insurancecompanies select the risks they bear, and publishers do like-wise, notwithstanding the fact that the funds they risk arisein part from monopoly profits. Where guess-work is a fairdescription of the publishing business, copyright no doubtincreases the amount of risk-bearing by lengthening the oddsreceivable on the winners. It fails, however, to describe agreat part of the book-publishing trade. The fortunes of

1 Evidence of T. H. Farrer, the Secretary to the Board of Trade, March I3th, 1877,Question 5o8o.


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I 934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I85publishers vary enormously, but the differences are not by anymeans attributable to luck alone. The authors who (it is ofinterest to observe) were included on the I876-8 RoyalCommission had had experience with publishers of widelyvarying success. To Dr. Wm. Smith, for instance, " only onebook in four is a very moderate calculation of the books whichare successful, of the books which pay their expenses."Anthony Trollope on the other hand had " learned from twopublishers within a short period that not one book in nine haspaid its expenses, and that still they have been able to carry onthe trade." The comment of the Secretary to the Board ofTrade was that " the public and the successful author musthave to pay handsomely for the publishers' unsuccessfulspeculations.", To the extent that publishers are successful inselecting books which sell, for issue at their own risk, and inrequiring the authors to finance the publication of theremainder, copyright legislation does not have the effect ofinducing them to undertake more risk-bearing. If the inten-tion be to secure the publication of books for which in a freemarket authors would have to pay, more certain methods ofachieving that end could certainly be devised. And if it couldbe assumed that there are public reasons for subsidising theproduction of such books, students of public finance willprobably agree that more equitable means could be found ofdistributing the cost. It is not, however, to be expected thatmany people would support the principle of indiscriminateencouragement of all books which publishers regard asunlikely to sell in sufficient volume to cover their cost. Andthis is precisely the result which copyright may secure.IO. Thefixing of prices: author v. publisher

It may be useful at this stage to set out the interests ofauthors and publishers respectively in the prices to be chargedfor books under copyright monopoly. It is not to be supposedthat both parties are necessarily best served by a price whichrestricts the supply of a book to the point of maximum netprofit to the publisher. The author's interest will dependrather on the terms of his contract with the publisher, andgenerally he will be better served by a larger edition and lowerselling price than will pay the publisher best. 'Where thepublisher is the entrepreneur, he is concerned to maximisethe surplus of aggregate receipts over aggregate costs. The

1 Evidence, Mareh i6th, 1877, Questions 519I-2-3.


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author on the other hand, if paid a fixed sum per copy or apercentage of the published price, has no concern with costs.If paid a fixed sum per copy, the author's receipts will begreater, the lower the final price and the greater the number ofcopies sold; if he receives a percentage of the published price,his receipts will be greatest when the gross receipts from salesare maximised, not (like the publisher) when net receipts afterdeduction of costs are greatest. Since every additional copyprinted adds something to the aggregatecosts of an edition, netreceipts and the publisher's profit are maximised at a smalleroutput and higher price than would result in the greatest grossreceipts and author's income. The divergence of interest isshown clearly in a diagram exhibiting aggregate receipt andcost curves.

R2CET .RECE PTS

Cos'rm_ A*|9Ar

OTAXIMUM oF I> ECEIPts ^J^=yS

OP -


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I 934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I87buyers of new books, particularly novels and biography,and dependent upon high book prices for public support, thecirculating libraries attained to a position in which they couldinsist upon the publishers maintaining high prices to the publicfor a term of years while supplying the libraries at less thanwholesale rates.' By issuing first an expensive and later acheaper edition, the publishers practised a very profitableformof price discrimination in the home market; but the librariesenforced a longer delay than some of them desired.A discriminating price policy for the overseas markets haslong been a regular feature of the publishing trade. Circulatinglibraries may pay less than booksellers for their supplies, but" colonial editions " usually sell at still lower prices. In thenineteenth century the reasons were diverse: the colonialcommunities were poorer, less interested in books and morecheaply supplied from other countries, particularly the UnitedStates and even the Continent, despite the difference oflanguage. Notwithstanding dumping, the prices charged byEnglish publishers for export were too high to meet therequirements of British colonial policy. In I 8 3 5, apparently,the India Council decided to admit the cheap Americanreprints of English books into India: the taste for the Englishlanguage and literature could not be cultivated widely enoughat the prices ruling for English editions.I 2. The " compulsorylicence" or " royalty " proposal

In such circumstances it is not surprising that increas-ing attention came to be paid to proposals for encouragingcompetition between English publishers by the introduction ofthe compulsory licence or " royalty" system. As has beensaid, the Keeper of Printed Books at the British Museumadvocated the system as early as I 8 37. R. A. Macfie, who hadfor years pressed the same proposal in the case of patents forinventions (the " licence of right " system was eventuallyintroduced on a voluntary basis in I 9 I 9), gave evidence beforethe Copyright Commission of I876-8 in which he outlined ascheme under which any publisher might issue an edition ofany book on payment, during the term of the copyright period,of a percentage of the published price to the author or his

1 See evidence to the I876-8 Commission, e.g. George Routledge: ". . . In the caseof novels published for the circulating libraries, you must give the trade a certain time[before lowering the price], or else they will not take them." Sir Charles E. TrevelyanNo doubt if the monopoly were abolished the circulating librarieswould collapse."


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I88 ECONOMICA [MAYassigns. Thereby the supply of successful books, and quitepossibly the remuneration of authors, would be increased. InItaly the law already provided for this system, at the end of along term of ordinary copyright. The Canadian Governmenthad just passed a law, as a measure of protection againstpirated editions from the United States, permitting Canadianpublishers to reprint English books on payment of royalty toEnglish authors. Sir Charles Trevelyan and many othersfavoured the adoption of the system in England; but theSecretaryto the Board of Trade, though personally sympatheticand strongly in favour of the free importation of cheap Cana-dian reprints into England, advised the Commissioners thatthe proposal was scarcely a practical question at the moment.1Only one of the fifteen Commissioners ultimately viewed itwith favour; the rest, including the authors, feared that ifpublishers' profits were reduced, unproven books would niotbe so willingly published. Herbert Spencer gave evidenceagainst the proposal, citing his own experience as an author ofphilosophical works. According to his figures, it was twenty-four years after the publication of his first book before thelosses on his works had been recouped. It should, however,be said that he included in the costs of publication his own" cost of economical living " during the period, that despitethe copyright law he apparently had to issue the books at hisown expense and risk, and that his receipts from sales inAmerica (where he had no copyright to keep up prices) wereapparently greater than from those in England. He estimatedhis net profits on sales in 1876, twenty-six years after pub-lishing his first book, at 4 I4 per cent., and he naturally fearedthat a law which allowed any publisher to reissue his books onpaying him a royalty of io per cent. might not yield him thesame income. He regarded himself as entitled to a monopolybecause in his view the demand for his works was inelastic fora fall in price: the royalty system, he thought, "would beespecially injurious to the particular class which of all othersneeds encouragement," the books described by the chairman

1 Evideenceof T. H. Farrer on January 3Ist, 1877 "It is, however, at the presentmoment in this country, scarcely a practical question. . . . Whatever advantages asystem of royalty might have, it would require new machinery of an elaborate kind,and it would disturb existing arrangements, and be opposed by existing interests. Itis, therefore, not worth while now to discuss it, nor am I prepared to meet the variousdifficulties of detail which would no doubt arise in considering it. To do so wouldrequire a far greater knowledge of the practice of the trade than an outsider can pretendto. But judging from the little I have been able to gather I should not think theminsuperable."


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I934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I89of the Commissionas " of the graverclass which do not appealto the populartastes." Studentsof philosophywerefairgamefor monopolisticauthors.I3. The CopyrightAct of I 9 II : the introduction f the " royalty"system

These considerations, therefore, were responsible in I 878for the decision of the Commission that " it is not ex-pedient to substitute a right to a royalty defined by statute,or any other right of a similar kind " for copyright as it thenexisted. It is consequently of particular interest to observethat thirty years later it was largely due to the pressure of agroup of publishers, in another field, for the adoption of theroyalty or compulsory licence system that the present amend-ing and codifying Copyright Act of I9I I (i and 2 Geo. V,ch. 46) was framed and passed. The publications in questionwere mechanical reproductions of musical compositions. InI908 a revised International Copyright Convention wassigned in Berlin, and by its thirteenth article ratifying coun-tries were invited to confer on authors and composers theexclusive right of authorising such reproductions. A depart-mental committee of the Board of Trade was appointed in I 909to consider the consequential changes that were desirable inthe copyright law of this country. Hitherto a large business inmechanical reproduction had been built up by gramophonecompanies and manufacturers of perforated music rolls andthe like, on the assumption thiatauthors and composers had noright to restrain the reproduction of their works by thesemeans. Those who prefer such language might say that thetrade coolly pirated musical works. The companies feared aserious disturbance and restriction of their business if thethirteenth article became law in this country: one largeconcern might secure rights so extensive as practically toexclude the others. They therefore presented importantevidence before the departmental committee, unanimouslydemanding a compulsory licence system for musical composi-tions, on the lines of an Act of I 909 which had just been passedin the United States, in order that they might retain theirexisting freedom to reproduce published music, subject onlyto a new liability to pay remuneration to the composer. Notevery musical composition, however, is capable of perfectperformance on a barrel-organ; and composers who gave evi-dence objected strongly to the compulsory licence proposal,


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insisting on their right " to control the mode in whichtheir pieces are produced and the character of the instrumentwhich produces them." The Committee with one dissentientreported in favour of the thirteenth article and the composers,and against the compulsory licence system. Nevertheless, the1911 Copyright Act (Section I9) made provision for com-pulsory licences for " records, perforated rolls, or othercontrivances by means of which . . . [musical works] maybe mechanically performed."The method adopted in this country for remunerating thecomposer differs from that in the United States, where a fixedspecific royalty of two cents was made payable on eachgramophone record. The gramophone companies favouredthe American system, and in their evidence before the depart-mental committee they opposed a royalty system based on apercentage of the selling price of the record, on the groundthat a composer would then be "paid for the value put into itby the interpretation of the great artiste." There was furtherthe problem of deciding one rate of remuneration for allcomposers. Both difficulties had been anticipated in 1838 byA.-C. Renouard.1 The basis adopted in the Act was, after thefirst two years of its operation, 5 per cent. royalty on the retailselling price of the contrivance, with a minimum of one half-penny for each separate musical work in which copyrightsubsists. The Board of Trade is empowered, after publicinquiry, to vary the rate by provisional order, at minimumintervals of fourteen years; and the administration of thesystem is controlled by the Board by regulation, apparentlywithout insuperable difficulty.The Act of I 9 1 again increased the duration of copyrightin general, but in the same clause a most important innovationwas inserted, at last introducing the royalty system into bookpublishing for the last twenty-five years of the copyright period.During that time, any person may reproduce a published work,

1 See his Trait6 des Droits d'Auteurs, Volume I, IX, p. 463. Of the royalty system,he wrote " Ce qui le rend inadmissible, c'est l'impossibilite d'une fixation reguli6re, et1'excessivedifficulte de la perception. Peut-etre, a force de soins, surmonterait-on lesobstacles a la perception ; mais, quant a la fixation de la redevance, le reglement en estimpossible.... Demandera-t-on a la loi de determiner une redevance fixe ? mais quoide plus injuste qu'une mesure fixe, rendue commune a des objets essentiellementinegaux ? . . .Si votre redevance a pour base une valeur proportionnelle, chaqueTelemaque de deux cents francs produira, pour le seul droit de copie, plus que nevaudra, dans l'autre edition [ai vingt sous], chaque exemplaire tout fabriqu6; etcependant ce sera toujours le meme texte qui n'aura pas plus de valeur intrinseque dansun cas que dans l'autre."

[MAYgo90 ECONOMICA


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I934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I9Iafter giving written notice and on paying royalties of i o percent. of the published price to the owner of the copyright onall copies sold. No great difficulty seems to have arisen inadministering this clause. The increase in the term of copy-right, in accordance with the Berlin convention, to the life ofthe author and a further period of fifty years is hardly likely tohave affected the terms of original publishing contracts and theoutput of authors' manuscripts; but the new royalty systemnow makes it possible for at any rate the second generation ofreaders after the death of an author to enjoy a wider circulationof his books at lower prices, in spite of the increase in thecopyright period.I4. Some conclusions oncerninghe necessityor copyright

The conclusions concerning the necessity for copyrightwhich emerge from this survey may now be summarised. Theparallelism with the case of patents for inventions is of coursevery marked. In the first place, expectation of direct rewardexplains only a part of the total output of literature, just as itfails to account for more than part of the inventions which aremade. Secondly, just as professional inventors continue to bepaid for their services in fields in which the patent system doesnot apply, so also have professional authors in modern timesbeen remunerated for their writings, whether by payment of alump sum or by way of royalty on the sale of copies, in acountry in which they were unprotected by copyright law. Thepublishers of new books are simply a special case of themanufacturers who exploit new but non-patentable inventionsfor which they pay the inventor. (Where no payments have tobe made to authors, and the demand for the book is not inserious doubt, publishers are not of course deterred by fear ofcompetition from issuing an edition. Of that fact the abun-dance of contemporary editions of standard works sellingsuccessfully against each other at different prices and in avariety of formats, affordsa continual demonstration.) Thirdly,copyright monopoly, like patent monopoly, enables theprivileged producers to increase their receipts from successfulproducts by restricting the supply, and in so far as experienceand special skill are unavailing when a publisher tries to gaugethe relative chances of success of certain kinds of manuscriptbooks, copyright will, as we have seen, lead to an increasedvolume of risk-bearing. This consideration applies, however,


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I92 ECONOMICA [MAY

over a definitely limited range of books; and it is extremelydoubtful on reflection whether there exist any public reasonsfor the indiscriminate ncouragement of the literature that fallsinto this category. Nor is there any reason why the increasedvolume of risk-bearing which copyright may elicit fromcertain publishers should materialise in the form of booksalone: a prudent business man might well spread the riskmore widely to include some racing or a gamble at Lloyd's withhis book publishing. The odds might be still more attractive.It is at least doubtful whether book-buyers and successfulauthors should be specially selected, by the effects of copyrighton the price of the books which sell, to provide the fund whichincreases the element of gambling inherent in the book-publishing business.More authors write books because copyright exists, and agreater variety of books is published; but there are fewercopies of the books which people want to read. Whethersuccessful authors write more books than they otherwise wouldis a question of " the elasticity of their demand for income interms of effort "-they may prefer now to take more holidaysor retire earlier. Some of them are in any case well advised towrite different books-instead of writing what they wouldotherwise want to say or have to say, they find it more remuner-ative to write the sort of thing for which the demand condi-tions are most appropriate for ensuring the maximummonopoly profit.

The expectation of higher profits from book publishing asthe result of copyright tends to increase the number of pub-lishers in the business. Keen competition between publisherswill enable the authors, whose copyright monopoly they areanxious to share, to make better bargains; with the result thatthe remuneration of publishers will tend to fall to the marketrate of return on their capital and skill in other fields.Apart, however, from the increased volume of unpleasant"remainders," the prices of books will remain above thecompetitive level so long as copyright subsists.There is, of course, no system of economic calculus whichsupports the contention that output of the type which mono-poly induces is " preferable " to that which emerges from thedifferent disposition of the same scarce productive resourcesresulting from the competitive bidding of the open market.One special weakness of copyright monopoly as an adminis-trative device is the non-discriminatoryature of the encourage-


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I 934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I93ment it affords to ventures which are too risky to be embarkedupon in a free market. It is not difficult to imagine particularcases in which literaryeffortmight well be specially encouragedon public grounds. Large undertakings involving manyexpert contributors and expensive illustrations might notinvariably find sufficient backers and " advance subscribers,"in view of the large capital outlay to be made by the firstpublishers, to mnake hem commercial propositions. Yet ifthere were public reasons for financing particular ventures ofthis sort, subsidies provided from general taxation have moreto commend them than a copyright monopoly; and if thatsystem were politically impossible, it would surely be betterthat copyright monopoly be limited to such enterprises, bysome such system as that in which the Comptroller of Patentsis at present authorised to grant exclusive licences to manu-facturersto exploit inventions which " cannot be . . . workedwithout the expenditure of capital for the raising of which itwill be necessary to rely on the patent monopoly " (Patentsand Designs Act, 1907, as amended, Section 27 (3), (c)).It is, however, a far cry from hard cases of this sort to acomprehensive system of copyright for all new books. To theeconomist who studies the statements of the case for andagainst the copyright system as we know it, there is no docu-ment more satisfying in its logic than the minority report inwhich Sir Louis Mallet, a member of the Royal Commissionon Copyright of I 876-8, stated the arguments against the con-tinuance of the monopoly. His conclusion was that in theabsence of copyright " it will always be in the power of thefirst publisher of a work so to control the value, by a skilfuladaptation of the supply to the demand, as to avoid the risk ofruinous competition, and secure ample remuneration both tothe author and himself."'l

1 The uniformly high quality of reasoning in Sir Louis Mallet's minority report canbe appreciated only if it is read as a whole, but a small extract may perhaps be quotedwith advantage:".... Property exists in order to provide against the evils of natural scarcity. Alimitation of supply by artificial causes, createsscarcity in order to create property.. . . It is within this latter class that copyright in published works must be included.Copies of such works may be multiplied indefinitely, subject to the cost of paper andof printing which alone, but for copyright, would limit the supply, and any demand,however great, would be attended not only by no conceivable injury to society, buton the contrary, in the case of useful works, by the greatest possible advantage. ...The case of a book is precisely analogous to that of a house, of a carriage, or of apiece of cloth, for the design of which a claim to perpetual copyright has never, I

believe, been seriously entertained."


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I94 ECONOMICA [MAY15. / practicalproposal

In 1878, however, the abolition of copyright was to SirLouis Mallet " a question of the future." That is still true.As he observed, " in a matter which affects so large andvaluablea property,and so manyvested interestsas havebeencreatedunder copyright laws, it would be both unjust andinexpedient to proceed towards such a change as has beenforeshadowed, except in the most gradual and tentativemanner." By a very simple change in our copyright legisla-tion, the next importantstep forwardmight now be taken.It is practicable, n that it merely changes the date at whichpartof thealreadyexistingand tested administrativemachineryset up underthe CopyrightAct of i 9 iI comes into operationin the case of every copyrightedbook; and, further, in thatthe price policy alreadyadopted by many publishing housesfor their most successfulbooks alreadyconformsvery closelyto that which the simple change would ensure for all bookswhich are reprintedafter the first edition. As long ago asI77I, David Hume wrote to his publisherWilliam Strahan:" I have heardyou frequentlysay, that no booksellerwouldfind profitin making an editionwhich would take more thanthree years in selling." In 1876, John Blackwoodtold theCopyright Commission: " Every publisher now is awarefrom actual experiencethat in order to reap the full benefitof a book, he must workit in a very cheapform as well as anexpensive one." In our own day, it is surely the commonpracticeof publishersto issue a cheap edition of successfulbooksvery promptlyafter the firstexpensiveissue has servedits purposewith the circulating ibraries. If the now existingcompulsory icence or royaltysystem (CopyrightAct, I9 I I,Section3) were madeto operatea few years-say fiveyears-after first publication,instead of being delayedas at presentuntil twenty-fiveyears after the death of the author, securityfor publishersagainst competitionwould be preserveduntiltheir firsteditionswere eitherdisposedof or " remaindered,"remunerationor authorswould continueon all sales through-out the full copyrightperiod,and the public would no longerhave to wait more thanfiveyearsfor cheapcopiesof the bookstheywish to buy. The first editionmight still be issuedby thepublisher at the price which best suited his pocket underconditionsof monopoly, but if he wished to retain the wholeof the business the compulsory licence system would then


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I 934] THE ECONOMIC ASPECTS OF COPYRIGHT IN BOOKS I95compel him to follow the present practice of many publishersand reissue his successes before the end of the five-year periodat a price low enough to deter competitors. There is, of course,nothing to prevent the successful sale, side by side, of a numberof editions by various publishers at different prices and indifferent formats; and in many cases the author's remunera-tion from his I O per cent. royalty under the compulsorylicence system would be greater than it is at present. Thereremains the theoretical objection, which we have alreadynoticedin connection with the existing royalty provision, to fixing onepercentage of royalty for all books and to giving authors a sharein the value added by paper-makers and printers and bindersto the more expensive editions; but their practical significancecan hardly be deemed to outweigh the obvious public advan-tage to be derived from the change. The most widely readauthors would still secure the greatest royalties from booksselling at the same price, and something can even be said forallowing authors additional remuneration if their booksare capable of sale in expensive as well as cheap editions. Thechange would, of course, tend to reduce the volume of risk-taking on purely speculative publications-a consequencewhich, it has already been argued, is hardly likely to involveany considerable impoverishment of our literary heritage.Particular cases might still form the subject of special provi-sion. The objection might be raised that academic texts andscientific treatises, which undergo constant revision for eachedition, might then be reissued in obsolete condition; butwith the adoption of the system, authors would surely see thewisdom of permitting the necessary alterations to be madeto keep reprinted editions up to date. Drastic modificationswould no doubt be made to an increased extent in the form ofentirely new works-a development which indeed from otherpoints of view has much to commend it. There cannot be anyquestion that it would be in the public interest to ensure lowprices for books as early as possible after the fate of the firstedition has revealed that a demand exists for them; and it is animportant feature of the proposed amendment that it involvesno new administrative principle, that it enables the con-tinuance of, if not indeed an increase in, the remuneration ofauthors whose books the public want, and lastly that it simplyconfirms and extends throughout the book-publishing business

arnold plant 'the economic aspects of copyright in books' 2548748

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